This BLOG On Moving To Another Owner Occupied Home Without Selling First Home Was UPDATED And PUBLISHED On October 23rd, 2020
There are strict rules and mortgage regulations with owner occupant home financing. We at Gustan Cho Associates get countless calls by potential homebuyers about Moving To Another Owner Occupied Home Without Selling First Home. Many borrowers are asking whether they can qualify for a second primary owner-occupant home without selling the first home.
- Most home buyers want to purchase their homes as owner occupant homes
- The main reason is that owner-occupied home financing offers the best mortgage rates
- Owner occupant homes require the least down payment on a home purchase
- All government loans are for owner-occupied homes only
- Buyers of second homes and/or investment properties cannot purchase these types of properties with FHA, VA, USDA Loans
- Only conventional loans allow for second home and investment property financing
- Lenders view owner occupant homes as being with the least risk
- Homeowners will be less likely to bail on their owner occupant homes when things do not go well with them financially than they would on second homes and/or investment properties
In this article, we will discuss and cover Moving To Another Owner Occupied Home Without Selling First Home.
Things To Take Into Consideration When Buying And Moving To Another Owner Occupied Home Without Selling First Home
Home Buyers who currently own an owner-occupied home and are thinking of moving to another owner-occupied home and are either selling exiting current owner-occupied home after they move or keeping it as a rental, there are several things to take into consideration:
- First, the purchase of another owner-occupied home needs to make sense
- Home Buyers who got a job transfer that is 60 miles or further from current home, then the deal makes sense
- They will most likely qualify the new home purchase going the owner-occupied route
- They can qualify for Two FHA Loans At The Same Time if the new home purchase is at least 100 miles away and the reason for the move is due to a job transfer
However, if home buyers are purchasing another home which is close by current owner-occupied home and the new is the same value and size, then the deal does not make sense.
Main Factor To Take Into Consideration When Qualifying For A Second Owner Occupant Primary Residence Home Mortgage
On the other hand, if the new home purchase is nearby current owner-occupied home but it is substantially larger and the reason for the move is because family have outgrown the current owner-occupied home, then the new home purchase will qualify as an owner-occupied home:
- By substantially larger, we are talking at least a 30% increase or greater in square footage
- It can be other factors as well such as downsizing to a townhome or condominium or smaller home due to the borrower’s children no longer living with the borrowers
- Before buyers decide on purchasing another home as an owner-occupied home, check with a mortgage lender and see if they can do the deal as an owner-occupied home
There are other considerations that you need to think about.
Purchasing And Moving To Another Owner Occupied Home
If you intend on keeping your current owner-occupied home and buying another owner-occupied home, you need to qualify for both mortgage loans
- There are instances where having two mortgage payments can disqualify you due to going over the required debt to income ratio requirements
- One way to solve this problem will be to state that the first owner-occupied home will be a rental and that home buyer will be renting exiting home after they move to new owner-occupied home
- In order to do this, mortgage lenders require that exiting home have at least a 25% equity on the first owner-occupied home
- If not, homeowners do not have to refinance
- But need an appraisal done on the first owner-occupied home and pay down mortgage loan so that the loan to value is at 75% and there is 25% equity
The appraiser will list the market rental rate for home and the mortgage lender will use 75% of the market rent as rental income.
Rental Income: Case Scenario
There are many cases where a homeowner has an owner-occupied home but rent the home and live elsewhere. Cases like this are common where the homeowner gets married and live with their new spouse and rent out their current owner-occupied home
- If the homeowner has a rental lease and has been declaring the rental income of their owner-occupied home for at least two years on their tax returns, then the full rental income declared on their tax returns can be used
On this particular case, 100% of the rental income can be used and not 75% of the market rent since it has been declared on their tax returns.
Qualifying For Mortgage With Direct Lender With No Overlays
Home Buyers who need to qualify for government and/or conventional loans with a national mortgage company licensed in multiple states with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at email@example.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates has a national reputation of not having any lender overlays on government and conventional loans. Gustan Cho Associates are also experts on non-QM loans and other alternative financing loan programs owner occupant, second homes, and investment properties. We are proud to have a reputation of being a one-stop lending shop.